Federal Loans

Federal PLUS Loan

What is a Federal Parent Loan for Undergraduate Students (PLUS)?

What if the PLUS loan application is denied?

Eligibility Requirements:

• PLUS loans are only available to parents, step-parents, and legal guardians of dependent students. If the student can answer yes to any of the federal dependency questions on the PLUS Loan Request form, then the student is considered automatically independent and his or her parent(s) are ineligible to borrow PLUS Loans.
• Non-exempt students must have registered with the Selective Service Administration. Students are exempt if they are female, under 18, born before 1960, on active duty in the U.S. Armed Forces, citizens of the Federated State of Micronesia or the Marshall Islands, or permanent residents of the Trust Territory of the Pacific Islands (Palau).
• The student and parent must not owe a refund on any federal grants, must not have borrowed federal student loans in excess of annual or aggregate loan limits, and must not be in default on any federal student loans unless satisfactory payment arrangements have been made.
• The student and parent must be U.S. Citizen, U.S. Permanent Resident, or Other Eligible Non-citizen as defined by the U.S. Department of Education.

Enrollment Requirements:

The student must enroll for at least 6 credits in a degree-granting program for each semester in which the PLUS loan will be received.

PLUS Loan Application Process:

1. Complete a "PLUS Loan Request Form" and submit it to the Office of Student Financial Aid (OSFA)

   Do you have to submit a FAFSA if you only want to borrow a PLUS loan?
   Yes. A FAFSA must be on file for the student before a Parent PLUS loan can be processed. If you are sure that your income is too high to receive a Subsidized Direct Student Loan and other need-based aid and you are not interested in borrowing an Unsubsidized (non-need-based) Direct student loan, you can submit the 2012-2013 PLUS Loan Request Form.

2. The borrowing parent must have a Federal PIN assigned by the Department of Education in order to electronically sign their PLUS loan Master Promissory Note at www.studentloans.gov. If the borrowing parent does not have a PIN, one can be requested at www.pin.ed.gov.
3. The Department of Education will evaluate your credit and approve or deny your application.
4. If your application is approved and the school has electronically certified the loan, the Department of Education will disburse your loan funds to the UM Bursar's Office.
5. The UM Bursar's Office will apply the loan funds to the student’s account.

Processing Fees:

The Department of Education is authorized to charge the borrower origination and guarantee fees. These fees will not exceed 4% of the amount borrowed and they will be deducted from each semester's disbursement.

Interest Rate:

The interest rate for the Federal PLUS Loan is fixed at 7.9%. Interest begins accruing when the loan is disbursed.

Repayment Terms:

Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years. Graduate students may defer repayment while they are in school. There is no six-month grace period as there is with the Direct Loan program. However, parents to may defer payments on the Parent PLUS loan while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. (Payments can also be deferred if the parents are themselves enrolled in college. They will need to submit an application for an in-school deferment). Note that since the interest on the PLUS loan is not subsidized, it continues to accrue while deferred and is capitalized when the loan enters repayment.

Borrowing Limits:

Parents may borrow up to the student's yearly Projected Cost of Education minus all other aid the student is receiving (including other student loans). There is no cumulative borrowing limit.